Early signs of a ramp up in Northern Ireland’s new car sales have been snuffed out by new supply chain disruptions caused on Russia’s war on Ukraine.
Latest data from industry body the Society of Motor Manufacturers and Traders showed 4,186 new cars were registered in the province in March, a fall of just over 9% on the same month last year and a sign the Ukrainian conflict is beginning to impact the trade.
Ukraine is a key supplier of a range of auto-parts, including cable harnesses, according to Ulster Bank’s Chief Economist Richard Ramsey, while Russia produces the precious metal palladium, which is used to make catalytic converters, and nickel, which is used to make car batteries.
As a result, production has been curtailed at a number of manufacturing plants including BMW, Porsche, Volkswagen, Ford and Mercedes-Benz.
The latest supply-side constraint comes just as a shortage of semi-conductors – a direct result of the Covid-19 pandemic and a reason for a slump in new car sales over the last two years – was beginning to ease.
“This means 2022 is shaping up to be another poor year for new car sales with no meaningful recovery expected,” Mr Ramsey said.
He pointed out that 2020 and 2021 were the two worst years for new car sales in Northern Ireland on record and last month’s registrations were down 41%, or 2,950 vehicles, on March 2019.
Meanwhile, inflationary pressures are also seeing a demand shift away from petrol and diesel cars.
Rocketing fuel prices have seen the UK as a whole record more electric car sales in March 2022 than in the whole of 2019.
However, stilted demand tempers every area of the market.
“Supply cannot currently keep up with demand,” Mr Ramsey said. “As the conflict in the Ukraine continues, lengthening lead times for vehicles is inevitable.”
As a result, the price of second hand cars has soared, with the Office of National Statistics recording a 30.6% increase in February 2022.
“This situation of elevated second-hand car prices doesn’t look set to change anytime soon.”
